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Sprint drops bid to buy T-Mobile, changes CEO

Sprint Corp has dropped its bid to acquire No. 4 U.S. carrier T-Mobile U.S. Inc after regulatory resistance showed no signs of softening despite months of lobbying, people familiar with the matter told Reuters.

The move is a rare setback for Sprint's Japanese parent, SoftBank Corp, whose billionaire founder Masayoshi Son had seen the acquisition as key to taking on U.S. market leaders AT&T Inc and Verizon Communications Inc.

Sprint, the No. 3 U.S. mobile carrier, and T-Mobile have not ruled out consolidation in the future but concluded that a deal is unlikely to be approved at this time, the sources said. U.S. regulators have insisted that they want to keep the number of major wireless carriers at four.

"We didn't think the opposition would be this strong," a SoftBank executive said, but added: "The environment will definitely change".

The failure to reach a deal could give added impetus to a rival bid for T-Mobile by French telecoms firm Iliad. Iliad made a lower bid than Sprint but is in talks with U.S. cable and satellite companies to sweeten its offer.

Representatives for Sprint and SoftBank declined to comment. T-Mobile did not immediately respond to a request for comment.

Sprint on Wednesday named Marcelo Claure, 43, as its chief executive, effective Aug. 11, to replace Dan Hesse, who has been CEO since 2007.

Claure founded mobile phone distributor Brightstar Corp, which was acquired last year by SoftBank.

Claure, who joined Sprint's board in January, transformed Brightstar from a small Miami-based distributor into a global business with $10.5 billion in gross revenue in 2013.

SoftBank said it would buy Claure's remaining interest in Brightstar.

SPRINT SET FOR HARDER RACE

Although Sprint's earnings have improved on the back of cost reductions, without T-Mobile its path to growth is unclear and it is expected to struggle.

Sprint is currently testing a number of new price plans.

"Without the prospect of an M&A lifeboat, investors will start to care again about things like, oh  valuation," MoffettNathanson analyst Craig Moffett wrote in a client note.

"Cash flow is likely to be negative or non-existent for years, and one cannot dismiss the possibility of having to turn to a capital raise to prop up its financial position," he wrote.

Under Hesse, Sprint underwent a rip-and-replace overhaul of its network infrastructure, causing cellular sites to go black and creating coverage holes that led to customer dissatisfaction and caused the company to hemorrhage subscribers.